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Booz & Company Bangkok, 21 August 2009 Profitability and Social Responsibility “Quo Vadis”

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Presentation on theme: "Booz & Company Bangkok, 21 August 2009 Profitability and Social Responsibility “Quo Vadis”"— Presentation transcript:

1 Booz & Company Bangkok, 21 August 2009 Profitability and Social Responsibility “Quo Vadis”

2 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 1 Booz & Company is a leading global management consulting firm  Booz & Company is a leading global management consulting firm — for nearly a century, we have helped our clients realize the essential advantage needed to survive, thrive, and win  Founded in 1914, our Firm is the oldest management consulting firm and the only consultancy that is a top-tier provider of consulting services to the private, public, and non-governmental sectors around the world  We bring foresight and knowledge, deep functional expertise, and a practice approach to build capabilities and deliver real impact  In 2008, we separated our operations from our U.S., government consulting business, which retains the name Booz Allen Hamilton  We continue our work with businesses, governments, and organisations around the world, now under the name Booz & Company  With annual sales of $1.3 billion, we have over 3,300 staff members in 57 offices than span more than 30 countries and 6 continents worldwide

3 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 2 We create ‘Essential Advantage’ through our four key capabilities Client Quotes  “ Booz enabled different functional areas to work with each other, breaking down the normal departmental barriers and parochialism…” CEO  “We had done over 20 projects with other consultants, but none of them were successfully implemented. Booz accompanied us from initial concept all the way through successful implementation” Program Executive Sponsor  “The real benefit is that Booz not only helped us develop a process, but we ended up with something we could use. I was impressed by the fact that we learned by doing. The savings potential across all our product lines is staggering”. Client Executive  “Booz’s ability to coordinate people in several countries, different sites and functions – along with suppliers – was one of the major challenges it met. I don’t think we could have pulled this off at the level we did without Booz”. Client Executive Results that Endure Strategy “Establish the case for Change” Implementation “Make the Change” Functional and Cross- Functional Skills “Define what to Change” Change Management “Make the Change stick”  A unique perspective on the dynamics of businesses and the competitive environment  Client-specific solutions to complex issues  Ability to execute or directly supervise the success-critical elements of the solution  Ability to structure and mange change programs on a global level  Deep functional expertise  Combined with specific industry knowledge  Ensuring results by changing behavioral and organizational characteristics of an organization “Creating Essential Advantage”

4 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 3 A Point of Departure … “A corporation's purpose is to maximize returns to its shareholders.”

5 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 4 A Point of Departure … “A corporation's purpose is to maximize returns to its shareholders. Therefore, corporations are only responsible to their shareholders and not to society as a whole. Only people can have social responsibilities.” “Those who would not force Greenpeace and the Salvation Army to generate a profit should not force businesses to take responsibilities outside their area of expertise.”

6 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 5 Some definitions -- but not ‘labels’ ( others include ‘Business Ethics’ and ‘Corporate Social Responsibility (1) ’ ) “Stakeholder Theory”  Developed by R. Edward Freeman in 1984 -- “Strategic Management -- a Stakeholder Approach”  “Stakeholder theory argues that a corporation is also responsible for other parties involved, including governmental bodies, political groups, trade associations, trade unions, communities, associated corporations, prospective employees, prospective customers, and the public at large” “Sustainability”  “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: –The concept of 'needs', in particular the essential needs of the world's poor, to which overriding priority should be given; and –The idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs." “Triple Bottom Line”  Coined by John Elkington in 1994, on his article “Towards the Sustainable Corporation: Win Win Win Business Strategies for Sustainable Development” (California Management Review)  The triple bottom line is made up of "social, economic and environmental" aspects -- "people, planet, profit"  It suggests that Corporations should be evaluated not only by their Financial Performance, but also by their ‘Environment’ and ‘Social’ performances Source: www.corporate-ethics.org//pdf/Strategic_Management_A_Stakeholder_Approach.pdf Source: “Our Common Future”, Brundtland Commission Report, United Nations (1987) -- World Commission on Environment and Development (WCED) Source: http://cmr.berkeley.edu/search/articleDetail.aspx?article=4900#9601 (1) A built-in, self-regulating corporate mechanism whereby business would monitor and ensure their adherence to law, ethical standards, and international norms (Wikipedia)

7 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 6 Some different views “Stakeholder Theory”  Developed by R. Edward Freeman in 1984 -- “Strategic Management -- a Stakeholder Approach”  “Stakeholder theory argues that a corporation is also responsible for other parties involved, including governmental bodies, political groups, trade associations, trade unions, communities, associated corporations, prospective employees, prospective customers, and the public at large” “Sustainability”  “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: –The concept of 'needs', in particular the essential needs of the world's poor, to which overriding priority should be given; and –The idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs." “Triple Bottom Line”  Coined by John Elkington in 1994, on his article “Towards the Sustainable Corporation: Win Win Win Business Strategies for Sustainable Development” (California Management Review)  The triple bottom line is made up of "social, economic and environmental" aspects -- "people, planet, profit"  It suggests that Corporations should be evaluated not only by their Financial Performance, but also by their ‘Environment’ and ‘Social’ performances Source: www.corporate-ethics.org//pdf/Strategic_Management_A_Stakeholder_Approach.pdf Source: “Our Common Future”, Brundtland Commission Report, United Nations (1987) -- World Commission on Environment and Development (WCED) Source: http://cmr.berkeley.edu/search/articleDetail.aspx?article=4900#9601 (1) A built-in, self-regulating corporate mechanism whereby business would monitor and ensure their adherence to law, ethical standards, and international norms (Wikipedia) “The idea of sustainable development is an oxymoron because development inevitably depletes and degrades the environment” Redclift, M. (2005). "Sustainable Development (1987–2005): an Oxymoron Comes of Age.”

8 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 7 A better starting point?

9 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 8 Some objectives  Aims of today’s discussion: –Improve our understanding of what sustainability means for us –Raise questions that will ultimately drive what we might need to do differently  It is NOT: –A list of actions –Workplans  Potential Questions that companies need to answer: –How do we define sustainability to fit our market, people and beliefs? –How important is sustainability? –Should we take a leader or follower position in sustainability? –Where to from here? 1 2 3 4

10 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 9 How do we define sustainability to fit our market, people and beliefs? “being able to adapt to future challenges to continue to do what we do” 1 What do we think? What is our definition? “integrating economic progress, social development, and environmental concerns with the objective of ensuring a quality of life for future generations that is at least as good as today's.” United Nations “meeting the needs of the present without compromising the ability of future generations to meet their needs” “using, developing and protecting resources in a manner that enables people to meet their current needs and also provides that future generations can meet their own needs” Or should we say: Oregon State University

11 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 10 Health concerns (e.g. childhood obesity) Responsible marketing Resource efficiency Community investment/engagement Organic Consumer-conscious labelling Green initiatives Corporate mission & values Socially responsible employer Employee learning & development Low cost High quality Labelling Reduced packaging Food miles / carbon footprint Responsible sourcing Investment returns Corporate social responsibility Good governance OH&S Waste disposal & recycling Waste minimisation How important it is depends on our current challenges Current Operating Landscape Regulation Consumers preferences Community expectations Customer advocacy Employees Shareholder requirements Any others? 2 CLIENT EXAMPLE: Candy Manufacturer

12 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 11 Should we lead or follow? Compliance (immediate term) Short term business advantages + compliance Investing for the future + short term business advantages + compliance Altruism (investing for society)  Doing the minimum necessary  Capturing short term opportunities  Addressing long term issues  Do things for the right reasons and profits will follow  Head office told us to  The legislation/customers require it  Competitors doing so we need to keep up  To manage risks to our business  To save money (eg through energy efficiency, reduced packaging)  To be prepared for coming changes (eg emissions trading)  It will drive innovation that will keep us ahead of our competitors  It will shape our future products  To ensure the long term future of our company  To build credibility in the community against brand shocks  It is part of who we are/our heritage  It is good for staff morale  It is our duty to leave this world a better place What we measure and report How we make our productsWhat we makeWhy we exist Description: What it impacts: Sustainability approaches: Possible contexts: 3

13 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 12 Alternative frameworks exist… 3 Philanthropy Community Affairs Corporate Community Investment Sustainable Enterprise Meeting Government Regulation CSR Tree Increasingly Strategic Engaging Stakeholders Source: Richard Bernhard, “Transitioning to Strategic CSR”, Thai-American Business (Journal of the American Chamber of Commerce in Thailand, 2009)

14 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 13 Hotel Chain Sustainability mission  To place an emphasis on all four elements of Sustainability (social, cultural, economic and environmental)  Shift mindsets (values, attitudes and beliefs) when they are out of step with the realities of a finite planet and a globally powerful human race  Restructure objectives and targets when the rewards and incentives are inconsistent with long-term social, cultural, economic and environmental aims Actions Philanthropy / Community Affairs Altruism  Contribute a percentage of revenues to local communities and local charities, who may be in need of assistance  Matching donations from guests Sustainability Short term business advantage  Bulk purchasing  Minimal packaging purchasing policy Community Investment / Sustainability Investing for the Future  Priority of purchasing locally manufactured products & natural / organic produce -- enhancing local capabilities  Fair trade purchasing practices  Carbon offset Fund FUNDING  0.5% of all income from guests is ‘donated’ to our Social Responsibility Program An example

15 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 14 Example: Global beverage company  Sustainable companies find areas of mutual interest and ways to make “doing good” and “doing well” synonymous, thus avoiding the implied conflict between society and shareholders  XXCo. is working toward several sweet spots –It has business goals of cost reduction which overlap with a series of environmental improvements to reduce energy, waste, and packaging Source: The Sustainability Sweet Spot; Andrew W. Savitz, with Karl Weber; Environmental Quality Management

16 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 15 Another example  The Bedol Water Clock is the most accurate, environmentally practical, hassle-free chronometer of its kind. Want a high quality, beautifully designed clock that literally runs itself? Look no further. Because the handsome Bedol Water Clock works 100% on natural power. It’s true. No batteries, no chemicals, no electricity – no pollution. You don’t even need to wind it up! Just fill the tank with natural tap water... add a splash of natural lemon juice... and you’re set for 6 to 8 weeks of accurate timekeeping before refreshing. (You won’t even lose time while changing water, thanks to the built-in memory chip!)

17 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 16 Example: We have examined the major emissions from our travel and office consumables Travel Office Consumables Office Facilities Off Site Costs Carbon Emissions Sizing Services Business Economy First Air Auto Public transport Limos Taxis Electricity Copying paper Food & Beverage Waste Water Lights Equipment Examined in this analysis Bldg embodied energy Building maintenance Furniture embod. energy Air-conditioning Cleaning Banking & Insurance Couriers IT and Comms Client facil. & consumables Hotels Meals & entertainment Hired cars  Out of scope: –Personal decisions unrelated to the business: Eg Travel to and from office, Use by staff of client facilities and consumables –Indirect emissions which result from the choices made by others and therefore beyond our control eg, Created by restaurants which we use

18 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 17 Emissions FY09 kg of CO2e PaperTaxis & LimosElectricityAir travel Air travel dominates our emissions followed by electricity and vehicle travel 91% of emissions Total = 6,500,000 kgs of CO 2 e Note:FY is April to March

19 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 18 Compliance Fighting Fires Playing Catch-up with Competitors Doing what we have to Lagging the pack and ultimately exerting more effort Adopting a reactive approach to dealing with matters of sustainability Conforming to minimum societal expectations and keeping within regulations 4

20 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 19 Short Term Business Advantage Managing RisksIn the PackSaving Money Being in the slip stream requires less effort Adopting sustainable practice to mitigate risk exposure Implementing sustainable practice has a short term financial upside 4

21 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 20 Investing for the Future Embracing ChangeLeading the Way Innovating New Products Being the leader of the pack and setting the standard for sustainable practice Understanding that the definition of Sustainability is not static and that the only way to fully adapt is to embrace change Allowing sustainable initiatives to shape ideas and drive innovation 4

22 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 21 Altruism A Better WorldValues and BeliefsConnection Being guided by values and beliefs and holding a set of objectives beyond profit Contributing to a greater purpose that serves humanity Creating linkages between people 4

23 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 22 A Hypothesis … “XXX can significantly improve long-term corporate profitability because it reduces risks and inefficiencies while offering a host of potential benefits such as enhanced brand reputation and employee engagement”

24 Profitability_Social Responsibility_Booz&Company-vFINAL.pptBooz & Company 21 August 2009 23 “The future can no longer be taken for granted – it needs to be rescued.” “… after Agriculture, Industry, and Knowledge, the next revolution is Sustainability.” Richard Neville (Footprints of the Future)


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